A team of advisors in Richmond, Va., departed Salomon & Ludwin, a registered investment advisor, this week to launch their own RIA, Founders Grove Wealth Partners, with support from Dynasty Financial Partners. On Tuesday, Salomon & Ludwin filed suit against the four team members and Founders Grove, claiming they intentionally misappropriated the RIA’s trade secrets to solicit their clients and breached their employment agreements.
The lawsuit names Founders Grove and four former S&L employees, including Jeremiah Winters, founder, managing partner and CEO of Founders Grove; Kate Atwood, founder, managing partner and president; Chief Operating Officer Jen Thompson; and Director of Client Experience Abbey Sorensen. It was filed in the U.S. district court for the Eastern District of Virginia.
A Dynasty announcement states the team previously managed $750 million in assets at S&L and chose Charles Schwab for custody.
Founders Grove declined to comment, and the firm’s attorney, Brian Hamburger of The Hamburger Law Firm, said, “Due to the nature of active litigation, we’re not in a position to comment.”
Read the lawsuit
Founders Grove recently joined the Protocol for Broker Recruiting, an agreement that allows departing advisors to take certain customer information and solicit them regardless of whether they had agreements that expressly prohibited such conduct. According to J.S. Held, the company that administers the agreement, S&L is a protocol member.
S&L, a Richmond, Va.-based RIA, was founded in 2009 by Dalal Salomon when she took her practice independent. Her partner, Dan Ludwin, joined the firm in 2018. The suit claims Salomon hired and trained financial advisors and operations professionals to exclusively serve her existing clients and their referrals. The firm now has a team of 12, including four advisors, four operations professionals, a trader and three executives.
The complaint states that in exchange for proprietary information about S&L’s clients, the firm required the four team members to sign employment contracts prohibiting them from disclosing or misusing that information. They were also under two-year non-solicit agreements.
The lawsuit claims all four violated a duty of loyalty and those employment agreements, taking client information and soliciting them.
S&L also alleges that Thompson, who was responsible for updating and developing S&L’s training manuals and transition processes, delayed the development and updating of those processes to make it harder to respond to their misconduct and hire new staff.
“Not satisfied with their role at S&L, the former employees began devising a plan to line their pockets by willfully stealing S&L’s clients and sabotaging its operations,” the claim stated. “They have solicited many—potentially hundreds—of S&L’s clients to pressure them to transfer accounts from S&L to FGWP.”
S&L is seeking injunctive relief against the firm, enjoining Founders Grove from disclosing and using its trade secrets and proprietary information. The injunction also seeks to prevent them from interfering with S&L’s business relationships and soliciting any of its clients during the restricted period. S&L is seeking damages, disgorgement of ill-gotten gains, attorney’s fees and costs and pre-judgment and post-judgment interest.